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Microsoft Corp. has revealed that sales of its Surface media and business tablets increased during the second quarter of fiscal 2014, which ended December 31, 2013. While the unit shipments of Surface are barely high, it is still noteworthy that the recent changes of Microsoft’ hardware (by introducing Surface 2-series) and software helped the software giant to boost demand for its slates.

The Redmond, Washington-based company has reported that Surface revenue more than doubled sequentially, from $400 million in the first quarter to $893 million in the second quarter. At the same time, Microsoft admitted that Surface cost of revenue was $932 million, which indicates that it lost at least $39 million on its tablets.

Microsoft did not specify how many Surface RT and Surface Pro slates it sold during the quarter. But assuming that the average selling price of a Surface-branded device is $700, then the software giant sold approximately 1.275 million of various Surface tablets in the fourth quarter of 2013, which includes sales during the holiday season.

“With Surface, demand continued to grow, benefitting from improved execution at retail and favorable reviews of the new Surface devices. Sequentially, both units and revenue more than doubled this quarter, with customers recognizing Surface’s differentiated value proposition as one device for everything in their life. We feel good about the progress we have made over the past couple of quarters, and are enthusiastic about the overall opportunity ahead with Surface,” said Amy Hood, chief financial officer of Microsoft, during a conference call with investors and market analysts.

One of the key reasons of low popularity of Microsoft Surface RT tablets is the Windows RT operating system. On the other hand, many people replace traditional laptops with Surface Pro since it is slimmer and is well-built.

Windows RT is a fully-fledged Microsoft operating system compatible with ARM-architecture application processors and incompatible with the vast majority of programs developed for Windows, something that clearly discourages anyone from using it. Given the fact that it carries Windows name, it confuses many buyers as people expect compatibility with their applications. Many PC makers, including Toshiba and Samsung, decided not to offer Windows RT-based devices early in the lifecycle of the OS so to avoid the misunderstandings. Other manufacturers, such as Dell, discontinued their Surface RT-powered offerings.

Tags: Microsoft, Surface, Windows RT, Windows 8, Windows, Intel, Nvidia

Discussion

Comments currently: 14
Discussion started: 01/29/14 07:10:23 PM
Latest comment: 01/31/14 11:30:18 PM
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[1-6]

1. 
It's hard to believe.
0 1 [Posted by: linuxlowdown  | Date: 01/29/14 07:10:23 PM]
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- collapse thread

 
Why, which pill did you swallow the Red or the Blue one?
0 0 [Posted by: s23e7h4kf936hklnf7y8b  | Date: 01/30/14 12:01:13 PM]
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2. 
If sales were 1 and went to 2 it is a doubling of sales. This is a truth which the PR chaps are trying to peddle.
1 1 [Posted by: tedstoy  | Date: 01/29/14 07:44:01 PM]
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WOW, you are actually stating that MS is selling tablets for over $400 million dollars each.
0 0 [Posted by: s23e7h4kf936hklnf7y8b  | Date: 01/30/14 12:03:04 PM]
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3. 
Easy to do when you are basically giving them away (they are selling them at this point for less than the production costs of each unit).
0 1 [Posted by: lol123  | Date: 01/29/14 07:48:49 PM]
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They are NOT giving them away at $450 (Surface II) or $350 (Surface I) and are only $39 million away from break even. If their sales just rises a small amount next quarter they will be profitable. And then there is the $$$ made from their App store that adds to the profit.
0 0 [Posted by: s23e7h4kf936hklnf7y8b  | Date: 01/30/14 12:00:35 PM]
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4. 
The assumption the the Surface branded device sells for $700 on average is a bit over the top.
Most people I know wont buy them for that high a price, why would they when you can pick up a very good Tablet for two thirds of that.
2 0 [Posted by: caring1  | Date: 01/29/14 10:14:36 PM]
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I also don't agree with the assumption of $700 ASP. I would think the Surface (RT I or II) is selling 3-4 times as many as the Surface Pro which would bring the ASP way down.
0 0 [Posted by: s23e7h4kf936hklnf7y8b  | Date: 01/30/14 12:06:28 PM]
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5. 
Consumer Reports (Mar 2014 issue) has the Surface Tablet with Windows RT as a CR Best Buy at a price of $350 and the Surface 2 at $450 as Recommended.
0 0 [Posted by: s23e7h4kf936hklnf7y8b  | Date: 01/30/14 11:55:47 AM]
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6. 
So now that sales have doubled they've sold (4) tablets...
1 1 [Posted by: beenthere  | Date: 01/30/14 12:16:45 PM]
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Great another idiot fanboi who thinks MS sold those four tablets for $223 million each.
0 0 [Posted by: s23e7h4kf936hklnf7y8b  | Date: 01/30/14 06:32:08 PM]
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PITY THAT SARCASM IS NOT YOUR FORTE.
0 1 [Posted by: tedstoy  | Date: 01/31/14 07:33:16 AM]
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So I am to take that your posts and beenthere's posts are pure garbage and add nothing to the discussion.

Waste of bandwidth.
0 0 [Posted by: s23e7h4kf936hklnf7y8b  | Date: 01/31/14 10:18:13 AM]
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Not knocking the products. The facetious remarks were and are aimed at the P.R departments in general. The P.R. department cause their organization more harm than good. viz Intel's P.R dept about "The Intel App Store" or AMD's about the FX processors. nVidia's PR is as bad if not worse than the above. All P.R. departments are prone to exaggeration it is their job, that's why they employ people who are often estranged from reality and the truth.
1 0 [Posted by: tedstoy  | Date: 01/31/14 11:30:18 PM]
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